Economic Regionalism: Analyzing the Role of China for Economic Cooperation in South Asia through SAARC

Abstract

In an epoch where multilateral arrangements have surpassed bilateral arrangements, regionalism is gaining extreme popularity. Economic Community of West African States (ECOWAS) has already proven to be an ideal regional forum for Africa, Shanghai Cooperation Organization (SCO) has served it’s security-economic purposes, ASEAN is setting examples of regional strength but SAARC that was established decades ago is gradually getting ineffective. SAARC, being the only regional organization that incorporates all the members of South Asia is an indicator of situation of South Asia as a whole. Fortunate enough, South Asia is bestowed with abundant natural resources that can provide a huge amount of raw materials for industrial products; is in geographically strategic location; has a huge market (with India in it); contains two nuclear powers- India and Pakistan; has immense scope for hydro-potentiality, that is, Nepal; is a hub for cheap labor force- Bangladesh and so on. These are the reasons why SAARC is gaining international attention from the leaders and rulers of world politics such as countries like Japan, USA and China in a huge scale even though this region is grounded in dire poverty. Though blessed immensely in terms of human and natural resources, South Asia is not able to reap the benefits since cooperation among the member states seems to be a distant thing and South Asia is still dwindling to find a common ground for cooperation. Unlike European Union, which had the necessity of bringing states together to fight communism and preserve European states from grave consequences of war, South Asia has no such immediate reasons to unite. The major reason for it’s inefficient functioning as observed thoroughly is it’s lack of economic integration and political stalemate situation between member states.

The overall purpose of this research is exploring the opportunities and challenges of granting membership to China in SAARC. It further throws lights on the ways China can get access to these opportunities while dealing with the probable challenges. This paper analyzes the need of China’s entry as a member state of SAARC to remove the technical, economic and political barriers of this organization. The infrastructural upper hand and connectivity projects of China can help remove these barriers. Hence, this research has focused on the economic benefits that can be achieved by both China and South Asia vis-à-vis membership in SAARC. This research has followed the qualitative method of research and used the secondary data. The research has examined role of China, India and Pakistan as the independent variables while economic cooperation of SAARC as the dependent variable. The method of analysis has been to explore the win-win situation created by this cooperation. The findings include the potential admission of China as a full-fledged member of SAARC and economic cooperation over various trade reforms. The findings of the research also include the failure of SAFTA to integrate the region economically. It points out at the connectivity barriers and individual states’ trust issues as the factor that is preventing SAARC from functioning well. The findings show that future implications for reform in economic sector seem possible as China gets admission in the group. The infrastructural upper hand, the investment capacity of China, China’s fair weather ally within the group, the leadership capacity and experience in leading regional groups makes China a considerate choice for upliftment from observer to full-fledged member. The opportunities received by individual SAARC members follow as trade booms in South Asia and export oriented market is established by focusing on comparative advantage of the products exported. Similarly, China also benefits as it gets to export on low tariffs and on limited barrier to one of the biggest markets in the world. South Asia has emerged with the status of one of the fastest growing economies in the world with growth set to rise up to 7 percent in 2019, then 7.1 percent in 2020 and 2021. (The World Bank Report, 2019, p.5). However, the challenge for this region is to increase it’s export to sustain it’s high growth and to explore it’s full economic potential. Another set of opportunity received by SAARC is a stable neighborhood and huge amount of cooperation rather than conflicts and border wars. Lastly, this thesis has drawn a conclusion that though SAARC is functioning in an efficient way, replacement of SAARC via other sub-regional arrangements cannot pay the desired benefits. The example has been drawn from BIMSTEC. Given the fact that it excludes two important members of South Asia, Pakistan and Maldives, this regional arrangement cannot be considered as the representative of South Asia as a whole. Rather, it only grows suspicions and fears among excluded members which may invite other extra-regional members with no cultural or historical similarity. In case of China, though it is a Central Asian nation, it has many immediate neighbors in South Asia which by default shows that peaceful South Asia is in best interest of China. To counterbalance the BIMSTEC nations, the excluded members may resort to stocking of nuclear weapons, forming another sub-regional group, signing nuclear deals with USA or Japan or even allowing military bases in worst case scenario. Hence, this thesis restates it’s idea of involving China in SAARC rather than opting for other alternatives.